Telstra Announces Restructuring Plans As Part Of Strategy To Buy The NBN
Telecommunications giant Telstra has announced plans to restructure the company, as part of a strategy that could see Telstra buying Australia’s National Broadband Network (NBN).
Telstra is Australia’s largest telecommunications company, delivering over 18.8 million mobile services. While Telstra is a publicly-traded company today (ASX: TLS), the telecommunications giant was formed when the state-owned Overseas Telecommunications Commission merged with the Australian Telecommunications Corporation in 1993.
Telstra owned Australia’s fixed-line network before the NBN network was established, with the Australian government acquiring the fixed-line network in 2007.
Telstra’s Restructuring Plan
Telstra’s plan to restructure itself will take shape in late 2021, with the company dividing into three separate entities. These entities include:
InfraCo Fixed, which will encompass the fibre, data centres, subsea cables, ducts and exchanges used in Telstra’s existing network.
InfraCo Towers, which will own and operate Telstra’s mobile towers (including the 4G and 5G networks).
ServeCo, which would be the ‘core’ of the business, developing new services and products and controlling Telstra’s spectrum assets and radio access network.
While Telstra is potentially years away from acquiring the NBN, the network would likely be owned and operated by InfraCo Towers, an existing branch of Telstra. According to statements made by Infraco CEO Brendon Riley, InfraCo draws in revenue of $306 million with an EBITDA (earnings before interest, taxes, depreciation and amortization) range of 63% to 67%.
While Telstra holds no ownership over the NBN, it did supply NBN Co with infrastructure for the NBN network.
How Telstra’s restructure would impact Australian businesses
In an article on his website, leading telecommunications consultant Paul Budde explains that Telstra’s infrastructure is the key part of Telstra’s business and Australia’s telecommunication industry.
He also believes that Telstra buying the NBN will impact all Australian businesses, as businesses buy services from digital companies who “depend on telecoms infrastructure to deliver their services, be it: search, video, advertising, shopping and all other services.”
Since 2010, Telstra has held a market share between 37% and 41% in the mobile phone service market, serving thousands of Australian businesses as a service provider alone. If it purchased the NBN, Telstra would reach over 7.8 million homes and businesses already on the NBN, with the potential to connect 11.8 million NBN-ready homes and businesses. This would give Telstra a monopoly over Australia’s network - but this has it’s benefits.
Budde points out that Telstra could reduce the number of towers it needed if it controlled the NBN, as new towers wouldn’t be needed for Telstra’s 5G network. According to Budde “it does not make economic sense to have three networks, as well as many private companies, overbuilding all of that infrastructure.”
Telstra is one of three telecommunications company’s building Australia’s 5G network, alongside Optus and Vodafone. By June of 2021, Telstra expects its network to reach over 75% of the Australian population. Already, there are over 400,000 thousand devices on Telstra’s 5G network.
Although buying the NBN would make Telstra Australia’s default internet provider, the acquisition could be positive for many Australian businesses. As Telstra has more resources and experience than NBN Co, the NBN may flourish under Telstra’s control, helping businesses by keeping the NBN profitable, improving customer service and increasing the efficiency of online services.
Keeping the NBN profitable
Australia’s NBN network is already heavily dependent on Telstra, which is NBN Co’s biggest customer acquiring 47.6% of NBN Co’s services. Although more Australians are switching to the NBN, NBN Co has struggled to make a profit selling to other vendors like TPG, Optus and Vocus.
Reports from February 2020 show that NBN Co had an after-tax loss of $2.8 billion in the first half of the 2019-20 financial year. These figures improved significantly by June, but NBN Co still lost $648 million in the final two quarters of FY 2019-20.
Merging Telstra and the NBN would create a company with over $30 billion in infrastructure assets and $10 billion in revenue, keeping the NBN profitable long-term. If the NBN became more profitable, it would be able to reinvest in the network: delivering better internet to customers.
Delivering better services to NBN customers
If connecting the NBN network became more attractive for Australian businesses it would reduce the cost of connecting to the network, as NBN Co would be able to recoup the costs of investing in infrastructure. The NBN would also use Telstra’s existing customer service infrastructure which has been carefully developed since Telstra was privatised in 1997.
Although the NBN delivers decent speed internet in some areas Australia’s NBN ranks 62nd globally for download speeds. If Telstra took control of the NBN the company could use its resources to improve network speeds, as NBN infrastructure could be merged with 5G network infrastructure.
Increasing the efficiency of services like online faxing
If Telstra acquired the NBN and increased the speed of the network it would increase the efficiency of services like online faxing.
Data from the Australian Bureau of Statistics shows that 86% of homes and 95.4% of businesses have internet access. As telecommunications infrastructure on the NBN and 5G networks expand, internet-based solutions like online faxing become more popular.
Unlike a physical fax machine that requires a constant input of time, toner, ink, money and paper, online fax service providers like eFax allow businesses to send faxes via their computer, tablet or smartphone.
This is safer, cheaper and smarter. As online faxes are encrypted and sent via the internet, they can’t be intercepted or interrupted. Online faxes are stored in the cloud, meaning you’ll save time and money on printing and storing faxes. Online faxing is also smart, as eFax allows you to send to multiple people simultaneously without getting a ‘line busy’ warning.
As Australia’s NBN network expands, many businesses are losing their fax connection - but not with eFax. eFax’s faxing experts can keep you faxing using your NBN number from day one.
eFax is a secure and reliable faxing solution passionate about helping Australian businesses stay futureproof.
To learn what eFax can do for you, start a 30-day free trial or call 1800 283 361 to speak to an online faxing expert.